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Debate regarding MV Agusta’s sale for 1 Euro continues – June 5, 2006

June 5, 2006
Filed under Features

Controversy continues to surround Proton’s recent sale of its 57.75 percent stake in MV Agusta Motors SpA for the token price of Euro 1 and the motorcycle manufacturer’s debts.
Joined by former Malaysia Prime Minister and Proton advisor Mahathir Mohamad, former Proton CEO Tengku Mahaleel Tengku Ariff, who led the company’s majority purchase of MV Agusta, publicly balked at the sale and continues to question who made the recommendation to sell and whether the deal had been sufficiently audited.
Proton Holdings Bhd. bought its stake in MV Agusta in December 2004 for Euro 70 million. In late 2005, in the wake of a leadership shake-up, the Malaysian company sold its stake to Italian investment vehicle GEVI SpA for Euro 1, MV Agusta’s Euro 107 million in accumulated debts and Euro 32.5 million in working capital requirements.
Proton is 47.8 percent owned by Khazanah Nasional Bhd, the Malaysian government’s investment arm.
At an April press conference, Tengku Mahaleel asked why there was no public offer for the sale at Euro 1. “If there was a public offer, I would have wanted to buy it (MV Agusta) for two Euro,” he said. “By selling for one Euro a company which was bought for a total of RM500 million, the board made sure that Proton would lose RM500 million.”
Malaysia Finance Ministry Parliamentary Secretary Datuk Seri Hilmi Yahaya, speaking with Bernama news service, said Proton’s board faced the possibility that MV Agusta would go bankrupt and, as a result, would bear commercial and financial risks and place its reputation at stake.
“The decision to sell its interest in MVAM was made based on a global investment bank study which found that the existing business model was not operationally and financially sustainable,” Hilmi said.
He said investment banks appointed to manage the sale of Proton’s equity in MV Agusta faced difficulties in securing purchasers who were willing to offer a higher price, except for a nominal value. “No one was keen to buy except two buyers, that is Gevi and HMB Capital,” he said.
MV Agusta Motors SpA, manufacturer of MV Agusta, Cagiva and Husqvarna, said it produced a three-brand total of 34,000 units last year.
The buyer of Proton’s 57.75 percent of MV Agusta, Gevi SpA, is reportedly an investment branch of the Genoa-based Carige Bank Group. The family of MV Agusta President Claudio Castiglioni continues to own 37.25 percent of the company, joined by Electrolux’s 3 percent and Massimo Tamburini’s 2 percent.

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